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Livestock Levels


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Live Cattle

April Live Cattle rallied to a new high on Friday, March 24, 2017, trading to123.20 before a late day selloff challenged support at 121.45, making the days low at 121.625. It closed near the open forming a doji candle. This indicates indecision in the market and a breakout from this candle could lead to the April contracts next move. A breakout above the high, puts the May 2016 high (124.675) in focus. Resistance then comes in at 127.20 and then 129.10. A breakdown below the low could lead to a test of support at the 8 DMA (120.125). Support then comes in at the 13 (118.825) and 21 (117.75) DMAs. The June contract is now the lead contract in live Cattle as its volume has been greater than the April contract. I will be focusing on the June contract from now on. The June contract consolidated on Friday after making its new high (114.20) on Thursday. Trading below the Friday low (112.325) could lead to a test of support at 111.175. Support then comes in at 109.10 and 106.90. A rally above the Thursday high could lead to a test of resistance at 114.90 and then the 8 DMA at 116.775. The Cattle on Feed Report came out after the close on Friday and it showed:

Number of Cattle on Feed, Placements, Marketings, and Other Disappearance on

1,000+ Capacity Feedlots - United States: March 1, 2016 and 2017

: Number : Percent of

Item :---------------------------:

: 2016 : 2017 :previous year

-----------------------------------------------------------------------------------

: ---- 1,000 head ---- percent

:

On feed February 1 .....................: 10,709 10,782 101

Placed on feed during February .........: 1,710 1,694 99

Fed cattle marketed during February ....: 1,591 1,648 104

Other disappearance during February ....: 58 56 97

On feed March 1 ........................: 10,770 10,772 100

Feeder Cattle

April Feeder Cattle tested resistance (136.80) early Friday morning, trading to 136.825 and then drifted the rest of the session making its low at the end of the session trading down to 135.00 before ending the day at 135.50. A rally above the Thursday high (137.425), could lead to a test of resistance at 139.775 and then 142.625. Trading below the Friday low could lead to a test of support at 133.00 and then 131.75.

Lean Hogs

June is now the front contract month for Lean Hogs. The last two trading days saw a violent battle between bullish and bearish traders. Thursdays action saw price drop to 74.125, just above support (74.225). The market reversed, causing panic buying to erupt and price rallied straight up to resistance (77.90), reaching 77.775 at the end of the session. Fridays price action took June Hogs past resistance to 78.25 before failing and retracing most of the Thursday gain. It dropped to 75.025 and ended the session at 75.90. Follow through to the downside could lead price to test support at 74.225 and then 72.875. Another reversal higher could see price test the 77.90 resistance level. The next level of resistance is at 82.35.

For those interested I hold a weekly livestock webinar on Friday, March 31 at 3:00pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.

Sign Up Now

Ben DiCostanzo

Senior Market Strategist

Walsh Trading, Inc.

Direct: 312.957.4163

888.391.7894

Fax: 312.256.0109

bdicostanzo@walshtrading.com

www.walshtrading.com

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.



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About the author


Ben DiCostanzo
Senior Market Strategist
Walsh Trading

I began my career in the Securities industry working as a runner on the floor of the New York Stock Exchange while I attended Pace University. I then started working for Salomon Brothers in their Government Bond Trading arena. After graduating from Pace University with a degree in Accounting, I transferred to Chicago and became a member of the Chicago Mercantile Exchange utilizing my experience to execute trades and manage risk for institutional clients as a broker for Salomon Brothers on the trading floor. I then embarked to trade for my own account in the stock indices pits as a local before moving off the floor to aid and assist individual clients in their trading endeavors. I now work at Walsh Trading holding a series 3 broker’s license whose duties include being the firm’s Chief Market technician.

I understand that every client's needs are different, and I pride myself in tailoring my service to each client's unique circumstances and needs. Individual client experience, risk tolerance, and capital all play a role in how I approach the markets. I am involved in all markets using technical analysis to find opportunities. My approach is driven by the principles of capital preservation.

My trading philosophy is that if you can recognize and manage the risk, you have a better chance to be successful in trading. I advise clients to always use stops as money management in my opinion is the most important ingredient in trading commodities.

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